World stocks stabilize after tumble over escalating trade dispute

World stock markets turned higher as investors monitored the escalating dispute between China and the U.S. over trade

World stock markets turned higher on Tuesday, stabilizing after heavy losses on Wall Street, as investors monitor the escalating dispute between China and the U.S. over trade.

The FTSE 100 in Britain rose 0.9% to 7,230, while France’s CAC 40 advanced 1.2% to 5,324. Germany’s DAX advanced 0.6% to 11,949. Futures augured an upbeat start on Wall Street, with the contract for the Dow Jones Industrial Average up 0.6% and that for the S&P 500, which on Monday suffered its biggest loss since January, adding 0.7%.

Investors already rattled by mounting tensions between Beijing and Washington got an extra jolt when China announced late Monday that it was raising tariffs on $60 billion of imports from the United States in retaliation for the Trump administration’s latest hike in import taxes on Chinese exports.

A clear hardening of attitudes, with state media blaring that China ‘will fight to the end,’ has stirred concerns of a protracted and widening trade war, Mizuho Bank said in a commentary.

Trade talks between the U.S. and China concluded Friday with no agreement and with the U.S. increasing import tariffs on $200 billion of Chinese goods to 25% from 10%. Officials also said they were preparing to expand tariffs to cover another $300 billion of goods.

Another sign of investor jitters, the VIX index, which measures how much volatility the market expects in the future, spiked 28.1% on Monday.

Still, since Beijing’s tariff increases only take effect on June 1 and those raised by Washington apply only to goods shipped after May 10, which will take a couple weeks or more to reach the U.S., there is still time to find a compromise in the festering dispute over Chinese efforts to gain a lead in advanced technologies through means that the Trump administration says are unfair and violate world trade rules.

In Asia, shares mostly closed lower as traders caught up with the earlier losses on Wall Street.

The Shanghai Composite index slipped 0.2% to 2,883.61 while Japan’s Nikkei 225 gave up 0.6% to 21,067.23. The Hang Seng index in Hong Kong, reopening after a market holiday on Monday, sank 1.5% to 28,122.02. The S&P ASX 200 in Australia dropped 0.9% to 6,238.40.

Energy futures recovered, with U.S. crude gaining 63 cents to $61.67 per barrel in electronic trading on the New York Mercantile Exchange. It lost 62 cents, or 1%, to settle at $61.04 per barrel on Monday. Brent crude, the international standard, picked up $1.08 to $71.31 per barrel.

The dollar rose to 109.72 Japanese yen from 109.31 yen on Monday. The euro rose to $1.1233 from $1.1223.